The Renewable Energy Investment Tax Credit (REITC) is a tax credit designed to encourage businesses and other entities to invest in renewable energy systems, like solar developments. This credit amounts to a percentage of the cost of the renewable energy system and can be claimed by taxable business entities and specific tax-exempt entities eligible for direct payment of tax credits. The percentage of the credit varies depending on the installation year, with a higher percentage applicable for systems installed before the credit gradually phases out. The REITC is just one component of a broader set of tax credits related to renewable energy generation and storage.
What Types of Renewable Energy Systems Qualify For ITC?
After learning about REITC, let’s overview the types of renewable energy systems that qualify for the Investment Tax Credit (ITC). The qualification depends on the installation year and the specific provisions outlined in the tax code. Typically, the ITC is applicable to the following renewable energy systems:
- Solar energy systems, which include photovoltaic (PV) systems and solar hot water systems
- Wind energy systems
- Geothermal energy systems
- Fuel cell systems
- Microturbine systems
- Combined heat and power (CHP) systems
It’s important to be aware that eligibility criteria for the ITC may change over time, and additional types of renewable energy and storage technologies could also qualify for the credit based on the specific regulations defined in the tax code.
Must Read: What is Investment Tax Credit (ITC)?